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From The Michigan Retailer March 2005
EXTREME Buying Trips
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Most retailers enjoy the occasional buying trip to Chicago, Atlanta, Las Vegas or Highpoint, North Carolina - it’s a welcome opportunity to combine business with a little pleasure.
Some might think Jim Fiebig takes buying trips to an extreme. His favorite destination is Madagascar, an island nation off the east coast of Africa, where for years he has bought colored gemstones for his jewelry store. Fiebig has also traveled to Kenya, Tanzania, Zanzibar, South Africa and Brazil.
For Fiebig, part of the pleasure of these “extreme buying trips” is the adventure that exotic locations provide, not to mention the natural beauty and wonder of being so far from his hometown of Sturgis. But it has also been quite profitable.
“I can buy gemstones at a price that pays workers in Madagascar generously and still make an incredible profit when I bring the stones back to be cut and set here,” he explained.
In March Fiebig returns to Madagascar - his fourth trip - to find a place to live; in June, he and his wife will move there. They plan to live there for about five months each year as Fiebig pursues a new career promoting and facilitating a different approach to buying colored stones.
On his trips to Madagascar, Fiebig goes to the local sellers and sometimes to the actual mines. Now he would like to host other jewelers who do discover this resource.
“Originally I saw myself taking jewelers on buying trips, but it’s really not essential that I accompany them from New York to Paris to Madagascar,” he explained.
“The important part of the trip - the part where my expertise can come into play - is in that moment when they step off the plane in ‘Tana,’ [Antananarivo], the capital of Madagascar, where things are a little different, and what you really want is a friendly face and a guide to this very different atmosphere.”
So he will meet traveling jewelers and act as a guide and an interface during their stay, sharing what he has learned about the country - the best restaurants (“as a former French colony the cuisine is awesome”), whale-watching or game reserve trips - as well as the ins and outs of the colored gemstone trade.
To facilitate this new enterprise, Fiebig has sold his successful jewelry store in Sturgis to a jeweler from neighboring Coldwater, Brad Rockey of Kiess Jewelers.
“Over the years, when things were rough, Brad and I would joke with each other, saying ‘Hey, buy me out!’” Fiebig laughs. “But Fiebig Jewelers did very well in 2004, so I didn’t want to go out of business, especially because it would leave a hole in a downtown I’ve been involved with for 20 years. So I convinced Brad the deal would be good for both of us.”
He and Rockey signed the deal in January, and it has been a seamless transition.
Good for business
Fiebig’s approach to buying colored stones in their country of origin is uncommon, perhaps unique. While many jewelers go abroad to buy diamonds - in Antwerp, Israel or South Africa - almost no one is traveling to buy colored gems.
“The big difference between the diamond trips, which many jewelers have done, and colored stone trips, which virtually no one has done, is that diamonds have become commoditized - buying is controlled by DeBeers, so in fact there’s very little savings.
“By contrast, for colored stones, there’s no cartel, there’s no price list - it’s a free market. The fact is, we have made some really incredible margins on some of these pieces.
“Jewelers are actually losing big on their diamond pieces - they may net only $500 on a two-carat ring. I see colored stones as a vastly untapped resource, and a way for jewelers to make up for some of those lost profits.”
The other huge benefit - one that Fiebig thinks could apply to many specialty retailers - is the public relations angle. His customers appreciate that he is a primary source and enjoy their connection with an international traveler.
“I may be gone for a week in Florida visiting my folks, but when I return to the store, everyone who comes in wants to hear where I’ve been - was it Africa, Asia, South America?”
Then there are the stories that make the sales process much more fun (and easier) by letting the customer enjoy the travel vicariously.
“A customer sees this beautiful ring with a pretty stone. I can tell her that it’s a spessartite garnet, and I bought it in Madagascar from a guy named Fauli,” Fiebig explains.
“I add ‘here’s a picture of me with Fauli - see that pile of stones on the table behind us, between those two glasses of beer? That’s where your stone was.’ What a story - customers love that.”
His Madagascar trips provide him with stories of amazing sights and experiences, which heighten the sales experience, whether it’s the story of seeing baby whales from the deck of a small boat or the recounting of the fabulous and cheap seafood the coastal resorts are known for.
“We jewelers sell nothing that anyone actually needs. Jewelry is always more about the emotion attached to it. And the story of where a stone came from increases the experiential value of the piece.”
Being more involved in the buying process or becoming a primary source is a great way to differentiate any retail store, according to Fiebig.
“It’s as much about process as product,” he says. By making buying trips special, a retailer brings back the stories and the romance of travel itself.
Madagascar
Fiebig can list many reasons why Madagascar is ideal for his particular niche.
“It’s the single most diverse source of colored stones on the planet, with every colored stone except Tanzanite,” he explains. “The country is about 80 percent Christian (mixed with indigenous belief traditions) and the rate of HIV infection is under 2 percent.”
It’s also politically stable, at least since the 2002 election of President Marc Ravalomanana. Fiebig had dinner with President Ravalomanana in February to discuss his business plans and was impressed with the leader’s honesty, intelligence and commitment to his country and his people.
“He’s the exception to the typical African political figure - voted in to replace a corrupt regime. In the last two years he has changed the country more than it had in the previous 20.”
Under this leadership, Madagascar finished first among 63 eligible countries in the 2004 Millennium Challenge. This USAID program rewards developing nations that, in President Bush’s words, “are ruling justly, investing in their people and encouraging economic freedom.”
Nevertheless, the country - with a population of about 17 million, roughly the size of California - struggles with poverty, with over 70 percent of the population living below the country’s poverty line.
“By conservative estimates, every week gemstones totaling about $1 million come out of the country’s mines and are sent to Bangkok to be cut - where 90 percent of the world’s gemstones are cut,” explained Fiebig.
“Yet the average household income in Madagascar is about $200 per year. I felt compelled to do something about it.”
The country has seen tremendous changes in the past decade, not only because of the political upheaval but also because of the discovery of new gemstone deposits in southern Madagascar. The small town of Ilakaka became a boomtown during what is known as the sapphire rush of 1998 - growing from about 40 people in the early 1990s to approximately 3,000 today.
For a while - with poor Malagasy workers pouring in to try their luck at hand-mining, and mining tradesmen from Sri Lanka and Thailand showing up as well - Ilakaka was Madagascar’s wild west, with all the excitement, danger and lawlessness that suggests. Under the new administration, the area is safer today.
Because these changes are happening relatively quickly, and the gemstone mining industry is still relatively young, Fiebig believes that now is the ideal time to establish a smart and ethical system of developing Madagascar’s natural resources without exploiting its people.
Fiebig also plans to work with aid agencies from both the U.S. and Madagascar to improve conditions there. He may work with the U.S. Agency for International Development (USAID), or at least join in local efforts to help the country alleviate the rampant poverty by promoting its natural resources.
His new career, as he sees it today, will have three prongs - helping retailers in the U.S. understand the colored stone trade, acting as a guide to retailers who visit Madagascar, and working with the governments and aid agencies in Madagascar and the U.S. to improve conditions for Madagascar’s workers in the industry.
If his plans look rather scattered (not to say schizophrenic), Fiebig sees them as all interrelated.
“My efforts to get more jewelers to make buying trips to Madagascar will lead to more people purchasing stones at a price that fairly compensates these dealers and miners, which can substantially improve their living conditions.
“If I get involved with bringing aid to this country, I’m working on much the same goal, and as conditions improve all around, more jewelers will be interested in traveling here, which leads back to fairer wages to the local people.
“At the same time, I’m helping U.S. retail jewelers, by increasing their awareness of the relatively untapped market for colored stones.”
Fair trade profits
Fair trade and socially responsible buying is another concept that Fiebig thinks retailers can use to differentiate their stores.
Fair trade, in its most general sense, means trade that tries to make sure that the people who produce (grow, mine or make) a product are treated well and fairly compensated. In many cases, environmental impact is also a factor in achieving the label of “fair trade.”
In the course of his buying trips, Fiebig came to learn more about the source of the stones, the conditions under which they’re produced and the trade system that moves them from the mines in Madagascar (for example) to the display cases in U.S. jewelry stores. With that awareness, and with the friendships he established with local dealers, his interest in fair trade grew.
But that interest is motivated not solely by a so-called “bleeding heart” - he is certain that fair trade is perfectly consistent with good profits. In his experience, the two have come together.
The importation of colored stones is not yet a measurable part of the fair trade movement, but that could change. Just as retailers and consumers are becoming gradually more aware of the ethical problems of buying conflict diamonds (illicit diamonds from which the profits fund war and rebellions in Africa), someday they may seek out colored stones that were mined ethically.
Right now a handful of shops offer jewelry with a fair trade association - usually in stores that offer crafts and other specialty goods from developing countries, such as the federation of small shops known as Ten Thousand Villages. Such shops tend to be proudly non-profit in their structure and their marketing, but that’s not Fiebig’s orientation.
“I am amazed that ‘fair trade’ has to imply ‘no profit.’ Our shopping abroad has really benefited my bottom line,” said Fiebig.
He points to the many places now offering fair trade coffee, from Starbuck’s to chic restaurants. Of the 70-some retailers and restaurants that offer Fair Trade Certified products in Michigan, almost all are selling coffee or other agricultural products (bananas, chocolate and coconuts in particular).
“People like feeling good about what they are buying. In many cases, people are willing to pay more for products that don’t exploit workers or the environment.”
The fair trade movement is growing steadily. According to the Fair Trade Federation, total fair trade sales in North America increased 44 percent in 2002, accounting for $180 million in sales. Most of that growth is in the food industry, but it is expected to grow beyond that beginning.
“It has to begin with the retailers,” Fiebig insists. “More retailers need to see fair trade as a profitable enterprise. It’s just a matter of distributing the profits more fairly along the supply chain.”
And it can’t hurt to acquire a reputation as a do-gooder. “If more American retailers gained a world perspective, we could do well and do good. If enough Americans became better world citizens, everyone would benefit.”
This article was written by Amy Buttery, Michigan Retailer staff writer.
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